Economy Part A Flashcards
Economics
The study of how people use their limited resorts to satisfy their unlimited wants
Scarcity
Occurs whenever we do not have enough resources to produce all of the things we would like to have. It is the basic economic problem
Goods/services
The different types of wants. Goods things that we can touch or hold,services are include work that is done for us. Wants are things people desire
Opportunity cost/trade off
Trade offGiving up one alternative good or service for another
Opportunity cost-The next best use of your money or time-next best option
Incentives
Reward offered to try to persuade people to make a certain economic decision
Producer/consumer
producer- the people or businesses that provide the goods and services
Consumer- the people who buy goods and services
Natural/land
Include a nation’s land and all of the materials nature provides that can be used to make goods or services. example trees for lumber
Human/labor
Includes workers and their abilities more workers=more production
Capital
Includes buildings and tools example-computers make work easier
Economic system
way of producing the things people want and need
Traditional
Economic questions are answered based on custom or habit-not very productive. Example-born into a family of farmers you would be a farmer
Market
Individual and businesses own the resources used to produce goods and services based on profit example-a business must make choices based on a desire for profit
Command
Planners work for the government answer the economic questions
They decide what is produced example- they decide whether society will produce machines or consumer goods
Mixed-market
Has elements of all three economic systems example the United States
Developed country
Modern market economy high standard of living Example-United States,Canada, Japan and Germany
Newly industrialized countries
Countries that have taken steps towards being developed countries not as advanced Example -China,Mexico, India
Developing countries
Trying to develop market economes examples- Africa, southeast Asia
Obstacles to development
Population growth-population increases faster than GDP
Trade barriers-intended to protect jobs only protects buisnesses
Single-Resource economics-depends on only one resource for economie growth
War-damages to all types of resources
Debt-Own large sums of money to wealthier nationa
Corruption-leaders steal the money
Fixed cost vs. Variable costs
Fixed costs-do not change no matter how much a buisness produces
Variable costs- costs that change depending on how a buisness produces
Total and marginal costs
Total cost-fixed costs +variable costs
Marginal costs- increase in expansie caused by producing another unit of somthing
Revenue
the money a business recieves from selling its goods and services
Marginal revenue
Additional income recieved from each increasenin one unit in sales
Benefit-cost analysis
Compares the size of the benefit with the size of the cost
